Inside account of how SBI’s YONO became one of the largest digital lenders in India

The country’s largest bank, the State Bank of India’s (SBI) super app YONO (You Only Need One), emerged from the bank’s initial idea of creating an ‘Online Marketplace’ to attract millennials. The initiative was titled ‘Project Lotus.’ Rajnish Kumar, the former SBI chief, has documented the journey of YONO in his new book, 'The Custodian Of Trust'. YONO was actually nurtured by Kumar, first as the MD and then as the Chairman of the bank, for the crucial first four years. Today, YONO platform is one of the largest digital lenders in the country, generating an average of Rs 1,500-2,000 crore loans per month. In fact, YONO has became the first digital bank in the world to break even in less than two years, and also started contributing to bank’s profits. But YONO’s initial journey has many hiccups.

Let’s look at YONO’s journey from Kumar’s eyes.

“After taking over as MD (National Banking Group), I started wondering if we were underestimating the transformational potential of YONO,” writes Kumar. The bank then decided to invite a number of consultants and external thinkers to make presentations to identify the potential objectives for Project Lotus. “While all the presentations provided rich insights, one of them, in particular, stood out — this was the presentation by McKinsey & Co, which incorporated three key elements, comprehensively suggesting what SBI could do differently from other banks in projecting itself as a digital icon,” details Kumar.

McKinsey & Co presentation actually set Kumar thinking hard and deep. ”It was increasingly becoming clear to me that we had to do something remarkably different from the run-of-the-mill apps to catapult SBI as a leader in the digital space as well,” notes Kumar.

“None of the other Indian banks had taken such an expansive view of their digital aspirations — for me, at some level, it was an aspiration to win the ‘Only SBI can do it’ tag,” he notes.

McKinsey’s presentation actually talked about creating an omni-channel and a seamless customer experience for all customers instead of only trying to attract new millennial customers. The consultant suggested SBI to focus on the entire 450 million-strong customer base of SBI. ”We wanted to ensure the sales of both our core banking products as well as our joint venture, subsidiary products through this platform, while also providing an online marketplace for meeting the ‘beyond the financial services’ needs of our customers,” writes Kumar.

The second important aspect was improving productivity and reducing cost–income ratios through customer journey redesign. “The new platform would provide us an opportunity to fundamentally redesign our customer journeys for both improving the customer experience and augmenting productivity, thereby eliminating several redundant steps in the banking process,” notes Kumar.

But it was not easy to convince the senior management team of the bank to go for such a massive big transformational change. “My dreams for taking the bank to new heights were, however, dampened by the over-cautious members of the bank’s top team, who were full of scepticism about the success of an advanced digital application promoted by a bank that catered to all classes of society, including those with limited digital literacy,” discloses Kumar.

Kumar had his task cut out in first trying to convince his reluctant colleagues. “There were several intense debates on the topic in the bank — the discussions culminated with an obvious question from the bank’s Chairperson, Arundhati Bhattacharya: ‘Are you sure we are not taking on too much?’“ recounts Kumar.

Finally, the bank decided to move forward with the plan, appointing McKinsey & Co as consultant and IBM as the technology partner.

The bank did a good thing by creating a separate operating environment for YONO team.

The bank hired a separate building for the YONO team, with the SBI team, the consultants, and the IT developers associated with the project stationed in the same office. The meeting rooms in the office were also converted into ‘garages’ with digital whiteboards and videoconferencing facilities, and were painted in bright colours to convey the impression of a typical start-up.

“While we ran an internal selection process to identify the best among our in-house resources, we also recruited a number of talented youngsters who had aspirations to create an impact in the technological space at a scale that would only be possible in a large organisation like SBI,” notes Kumar.

The team worked with a ambitious target team of launching the services by September 2016, but there were multiple challenges on the way.

“As we started with the first set of redesigns for the app, the entire team started behaving like the proverbial kid in a candy store,” details Kumar.

All the journeys to be navigated on the app showed significant scope for rationalisation. For instance, the previous account opening journey at the bank branches took about 60-70 minutes, and required the customer and branch staff to fill in 58 fields. Leveraging Aadhaar, the bank designed the journey on the app to perform the entire task in eight to ten minutes, and reduce the number of manual fields to 14. Likewise, for payments, what earlier would take more than ten clicks to complete a payment was now designed to be done in three clicks. “My advice to the team was to ensure that none of the tasks should take more than three clicks by the customers to get done, and we found that in most cases, this was actually possible,” writes Kumar.

As the  challenges mounted, delays began to set in. Sometimes the redesigned journeys would not perform as they were supposed to, at other times, the APIs connecting the front-end to the Core Banking System (CBS) failed to respond. “Often, we noticed flaws in the design journey itself, compelling the entire team to go back to the drawing board, and leading to a complete waste of the time and effort spent in the development of the journey,” discloses Kumar.

To add to the complications, the team was also dealing with regulatory changes. The courts disallowed the Aadhaar-based digital account being disallowed, and then the team had to redesign the entire journey from scratch.

Finally, the launch date was fixed for November 2017. “The entire project had taken us more than double the anticipated time — 13 months instead of the originally planned six months, but as our consultants never failed to remind us, what we were aspiring for was a much more ambitious project than anything attempted by any bank prior to this,” writes Kumar. In the meantime, Kumar was also appointed as Chairman of the bank in October 2017, which meant greater degree of focus from the chairman’s office.

The rest is history.

Also read: Ex SBI Chairman reveals Tatas' interest in Jet Airways and equity players' enquiries for Yes Bank